Senators see support for "clunker" extension

WASHINGTON (Reuters) - Senate leaders from both parties are interested in striking an immediate $2 billion deal to replenish the "cash for clunkers" auto sales incentive, while the White House warned the program would cease at week's end without more money.

Sens Dianne Feinstein, a Democrat, and Susan Collins, a Republican, said on Monday that the Obama administration had eased their concerns about the program and recommended the chamber approve the proposed remedy as soon as possible.

"The program appears to be running very well," Feinstein said at a news conference about the month-old "clunker" incentive that offers consumers up to $4,500 to trade in older cars for new, more fuel efficient vehicles.

Under the program, older vehicles qualify for the clunkers program if they get 18 miles or less to the gallon and are less than 25 years old. Those guzzlers can be scrapped with consumers given up to $4,500 if they buy smaller, more fuel-efficient vehicles.

For cars, the new vehicle has to have a combined fuel economy of at least 22 miles per gallon. Details on the program are available at www.cars.gov.

Until Monday, Feinstein and Collins were seen as potential obstacles over concerns the program was not yielding sufficient fuel efficiency improvements. However, they were satisfied with Transportation Department data on Monday showing a nearly 10 percent overall mileage gain compared with trade-ins, mostly light trucks.

Regulators confirmed to Collins and Feinstein that 120,000 vehicles had been sold. Industry and government estimates continued to show the final tally would likely double that figure.

Collins said there was interest within the Republican leadership to proceed with the extension, while Feinstein said she believed there were the necessary 60 votes to overcome any opposition in the Democratic-led Senate.

The earliest members could take up the measure is Tuesday but lining up votes and negotiating possible obstacles could muddle that timeframe.

"There are procedural hurdles. There are people who do not want it to continue," Feinstein said of the potential for Republican opposition to surface.

Democrats are scheduled to meet with President Barack Obama on Tuesday at the White House to discuss, among other things, strategy for pushing the extension, approved by the House of Representatives last Friday, through the Senate.

"They want to get something done this week," said a Democratic party source who was not authorized to speak for attribution about the matter. "The devil is in the details."

White House spokesman Robert Gibbs said earlier in the day that the administration "was very hopeful" the Senate would act before leaving town on Friday for a month-long recess.

But he warned that the program's $1 billion funding level was nearly exhausted.

"I think if it doesn't happen this week, it's unlikely that we'll make it to the weekend with a program that can continue," Gibbs said.

The administration began tallying sales a week ago, but a paper-work logjam has slowed efforts to produce an updated accounting. Transportation Department officials met with vendors over the weekend to expedite the administrative work.

Earlier Monday, the administration reported confirmed sales of 80,500 vehicles.

That "clunkers" data showed General Motors Corp, Chrysler Group, and Ford Motor Co running about even with recent marketshare totals by claiming nearly half the sales. The best-selling vehicle was the Ford Focus.

Ford, the only Detroit manufacturer not to operate with the help of a federal bailout and the only one of the three not to seek bankruptcy, reported on Monday that "clunker" incentives contributed to its first year-over-year monthly sales increase since November 2007. Ford's shares rose 4 percent.

GM, which exited bankruptcy in July, reported an overall sales decline but noted that retail sales rose for a fifth consecutive month, supported by "clunker" incentives.

GM reported a 54 percent increase in small-car sales and 78 percent of Toyota Motor Corp "clunker" sales included the popular Prius gas-electric hybrid, Camry sedan and Tacoma pickup. Most of the Volkswagens sold were clean diesel Jetta TDIs, figures released by manufacturers showed.

The program was established in part to help GM and Chrysler get on their feet after emerging from bankruptcy.

The administration has promoted success of the "clunker" incentive as a modest boost to an economy mired in recession. Former Federal Reserve Chairman Alan Greenspan told ABC's "This Week" program on Sunday the "extraordinary response" was a sign that confidence in the economy was starting to pick up.

(Additional reporting by David Bailey in Detroit, Tom Ferraro, Rick Cowan and Jeff Mason in Washington)

(Reporting by John Crawley; editing by Carol Bishopric, Bernard Orr)